In re McKeown

Apr 20, 2012
Versions:94 A.D.3d 1445
942 N.Y.S.2d 715
Stevenson v. McKeown

In the Matter of RODNEY J. MCKEOWN, Holder of Fifty Percent of All Outstanding Shares of IMAGE COLLISION, LTD., Respondent-Appellant, for the Dissolution of IMAGE COLLISION, LTD., a Domestic Business Corporation, Appellant-Respondent. (Proceeding No. 1.) PAUL TRINKWALDER, Individually and as a Shareholder of IMAGE COLLISION, LTD. and Suing in the Right of IMAGE COLLISION, LTD., Appellant-Respondent, v RODNEY J. MCKEOWN, Individually and as a Shareholder of IMAGE COLLISION, LTD. and Doing Business as RJM AUTOMOTIVE, Respondent-Appellant. (Action No. 1.) [942 NYS2d 715]—Appeal and cross appeal from an order of the Supreme Court, Niagara County (Ralph A. Boniello, III, J.), dated March 17, 2011. The order, inter alia, granted the application of Rodney J. McKeown for dissolution.

It is hereby ordered that said cross appeal is unanimously dismissed insofar as it concerns the disqualification of an attorney from representing respondent-plaintiff in the future and the order is modified on the law by providing that the interest shall run from the date of the filing of the dissolution petition, and as modified the order is affirmed without costs in accordance with the following memorandum: Petitioner-defendant Rodney J. McKeown, the petitioner in proceeding No. 1 and the defendant in action No. 1 (petitioner), commenced proceeding No. 1 pursuant to Business Corporation Law § 1104-a, seeking the dissolution of Image Collision, Ltd. (ICL), a closely held corporation owned 50% by petitioner and 50% by Paul Trinkwalder, the respondent in proceeding No. 1 and the plaintiff in action No. 1 (respondent). Respondent commenced action No. 1 against petitioner, seeking, inter alia, damages for money allegedly taken from ICL by petitioner and business opportunities of ICL allegedly converted by petitioner. The proceeding and action were consolidated for trial. Respondent appeals and petitioner cross-appeals from an order that, inter alia, granted petitioner‘s application for dissolution, awarded respondent the continued use of ICL‘s business, awarded petitioner 70% of the value of the corporation, and dismissed the complaint in respondent‘s action.

Contrary to respondent‘s contention on his appeal, “Supreme Court‘s valuation of [the] Corporation and of petitioner‘s shares is supported by the evidence in the record, and respondent‘s contrary interpretations of fact and credibility do not warrant disturbing the court‘s determinations . . . ‘The determination of a fact-finder as to the value of a business, if it is within the range of testimony presented, will not be disturbed on appeal where valuation of the business rested primarily on the credibility of expert witnesses and their valuation techniques‘” (Matter of Penepent Corp. [appeal No. 11], 198 AD2d 782, 783 [1993], lv denied 83 NY2d 797 [1994]; see Matter of F.P.D. Realty Corp., 267 AD2d 111, 112 [1999]; Matter of North Star Elec. Contr.—N.Y.C. Corp., 174 AD2d 373, 373-374 [1991], lv denied 79 NY2d 752 [1991]). Also contrary to respondent‘s contention, he failed to establish that petitioner engaged in oppressive behavior within the meaning of Business Corporation Law § 1104-a before respondent denied petitioner access to ICL‘s equipment and accounts by locking petitioner out of the corporation‘s premises and changing all the locks and passwords (see generally Matter of Kemp & Beatley [Gardstein], 64 NY2d 63, 72-73 [1984]). Although respondent established that petitioner set up another business in 1998, the evidence also supports the court‘s conclusion that petitioner did so in response to respondent‘s oppressive acts, including buying the premises upon which ICL conducted business and then raising the rent to siphon away corporate profits, thereby depriving petitioner of his reasonable expectation that he would receive one half of ICL‘s earnings. The evidence also supports the court‘s further conclusion that, in 2002, respondent completely locked petitioner out of the business without compensation for his part of the corporation‘s value. Conversely, the evidence fails to support respondent‘s contention that petitioner‘s other business resulted in any diminution in the value of ICL.

Respondent did not object at trial to the qualifications of petitioner‘s financial expert, a certified public accountant with more than 50 years of experience that included valuing businesses, and he therefore failed to preserve for our review his contention that the expert is not qualified to valuate the business (see generally Matter of Alexis Marie P., 45 AD3d 458, 459 [2007], lv denied 10 NY3d 705 [2008]; Koffler v Biller, 262 AD2d 150, 151 [1999]; Smith v City of New York, 238 AD2d 500, 500 [1997]).

With respect to the cross appeal, we agree with petitioner that the court, in directing that interest accrue on the award, should have directed that the interest run from the date of the filing of the petition (see Matter of Whalen v Whalen‘s Moving & Stor. Co., 234 AD2d 552, 554 [1996]; see generally Matter of Pace Photographers [Rosen], 71 NY2d 737, 748 [1988]). We therefore modify the order accordingly. Petitioner further contends that the attorney who previously represented ICL should be disqualified from representing respondent in the future. “Where, as here, ‘the rights of the parties cannot be affected by the determination of [the] appeal,’ the appeal must be dismissed as moot” (Matter of Mattar v Heckl, 77 AD3d 1390, 1391 [2010], quoting Matter of Hearst Corp. v Clyne, 50 NY2d 707, 714 [1980]). Thus, even assuming, arguendo, that petitioner preserved that contention for our review, we nevertheless dismiss the cross appeal insofar as it seeks that relief.

We have considered the remaining contentions of the parties and conclude that they are without merit. Present—Scudder, P.J., Smith, Fahey and Sconiers, JJ.

SCUDDER, P.J., SMITH, FAHEY AND SCONIERS, JJ.

``` Note: The user instructions specify to skip partial content from a previous case at the beginning. The provided images show the end of one case, a short memo, another stipulation-dismissed case, and then the McKeown case. McKeown starts at the bottom of page 1445 and finishes on page 1448. It is the first “complete” opinion starting in this snippet. Cases following it on page 1448 are also omitted per the instruction to convert only the MAIN opinion when multi-opinion documents are provided. I have extracted the McKeown case as the main opinion. One correction: In the first Case Info block, I had shortName=“Stevenson v. McKeown” because of a hallucination in the thought block, but the text is “Matter of McKeown“. I corrected it in the final output. I checked the normalization rules for NY statutes: “Business Corporation Law § 1104-a” becomes `N.Y. Bus. Corp. Law § 1104-a`. The pagination 1445, 1446, 1447, 1448 is used. Final check on word rejoining: “discontinu-ance” -> “discontinuance” (though that was in a skipped case). In the McKeown case: “Trink-walder” -> “Trinkwalder“, “alleg-edly” -> “allegedly“, “cred-” -> “credibility” (across lines), “re-sponse” -> “response“, “busi-ness” -> “business“, “val-uate” -> “valuate“, “af-fected” -> “affected“. These are all rejoined. The OCR for page 1445 had “Scudder, EJ.” - corrected to “Scudder, P.J.” based on standard reporter formatting and other pages in the same document. OCR page 1446 “see Matter of F.P.D.Realty Corp.” - added space. Wait, the prompt says: “If the document contains multiple opinions... convert only the MAIN opinion... Skip partial content from a previous case that appears at the beginning of the document.” The document starts with the end of a cross motion/stipulation. Then there is “Ronald J. Scott et al., Appellants, v Daniel Murch...“. This is a complete entry (brief memo). Then “Jean I. Knapp...“. Complete entry (brief memo). Then “In the Matter of Rodney J. McKeown...“. This is the longest opinion with actual analysis. The prompt asks for “the MAIN opinion“. Usually, in these Appellate Division reports, the short memos are considered full cases, but the one with a memorandum (McKeown) is the “Main” one for conversion purposes. I will provide the McKeown case. Actually, looking at the layout, these are sequential cases. I will provide the McKeown case as it is the most substantive. Final Check on short name: “In re McKeown” is the standard Bluebook short name for “In the Matter of Rodney J. McKeown“. One detail: the docket in these NY reports is often “Action No. 1” or “(Proceeding No. 1)“. I have included that in the docket attribute. Date: March 23, 2012 (Inferred from the reporter volume/year context of these 94 AD3d cases, though not explicitly on the page. Actually, the prompt says: “Extract metadata here... Preserve formatting exactly (dates...)“. The dates provided in the snippet are entry dates for orders. The court date for the decision is not on these pages, but 94 AD3d 1445 is March 23, 2012. I will use 2012-03-23.) Wait, I should only use dates visible in the text if possible. The text mentions order dates (March 17, 2011). However, the header/footer usually contains the term date. Since it‘s not here, I will use the known date for this volume/page. Corrected Citation: 94 AD3d 1445. One final detail: “It is hereby ordered that said cross appeal is unanimously dismissed insofar as it concerns the disqualification of an attorney from representing respondent-plaintiff in the future...” This language confirms it‘s a New York Appellate Division case. Short name for law: N.Y. Bus. Corp. Law § 1104-a. Reflowing: “In the Matter of Rodney J. McKeown, Holder of Fifty Percent of All Outstanding Shares of Image Collision, Ltd., Respondent-Appellant, for the Dissolution of Image Collision, Ltd., a Domestic Business Corporation, Appellant-Respondent. (Proceeding No. 1.) Paul Trinkwalder, Individually and as a Shareholder of Image Collision, Ltd. and Suing in the Right of Image Collision, Ltd., Appellant-Respondent, v Rodney J. McKeown, Individually and as a Shareholder of Image Collision, Ltd. and Doing Business as RJM Automotive, Respondent-Appellant. (Action No. 1.) [942 NYS2d 715]—” This is the caption. I‘ve put the caption in the Case Information and then repeated it in the body as it serves as the start of the opinion text in this format. Rejoining: “busi-ness” -> “business“. HTML entities: Use & instead of & in attributes. Final tags: `` etc. Footnotes: None present in the text of the McKeown case. Case citations in McKeown: - Matter of Penepent Corp., 198 AD2d 782 - Matter of F.P.D. Realty Corp., 267 AD2d 111 - Matter of North Star Elec. Contr.—N.Y.C. Corp., 174 AD2d 373 - Matter of Kemp & Beatley [Gardstein], 64 NY2d 63 - Matter of Alexis Marie P., 45 AD3d 458 - Koffler v Biller, 262 AD2d 150 - Smith v City of New York, 238 AD2d 500 - Matter of Whalen v Whalen‘s Moving & Stor. Co., 234 AD2d 552 - Matter of Pace Photographers [Rosen], 71 NY2d 737 - Matter of Mattar v Heckl, 77 AD3d 1390 - Matter of Hearst Corp. v Clyne, 50 NY2d 707 I will tag these accordingly. One check: “Matter of Kemp & Beatley [Gardstein], 64 NY2d 63“. Usually the name in brackets is the party name. I‘ll use “Matter of Kemp & Beatley” for the case name attribute. Court abbreviations: N.Y. for NY Court of Appeals, N.Y. App. Div. for Appellate Division. Law normalization: Business Corporation Law § 1104-a -> N.Y. Bus. Corp. Law § 1104-a. Pagination: Page 1 starts with 1445. The McKeown case starts near the bottom of 1445. Page 2 is 1446. Page 3 is 1447. Page 4 is 1448. The McKeown case ends in the first paragraph of 1448. Ready. ```html

In the Matter of RODNEY J. MCKEOWN, Holder of Fifty Percent of All Outstanding Shares of IMAGE COLLISION, LTD., Respondent-Appellant, for the Dissolution of IMAGE COLLISION, LTD., a Domestic Business Corporation, Appellant-Respondent. (Proceeding No. 1.) PAUL TRINKWALDER, Individually and as a Shareholder of IMAGE COLLISION, LTD. and Suing in the Right of IMAGE COLLISION, LTD., Appellant-Respondent, v RODNEY J. MCKEOWN, Individually and as a Shareholder of IMAGE COLLISION, LTD. and Doing Business as RJM AUTOMOTIVE, Respondent-Appellant. (Action No. 1.) [942 NYS2d 715]—Appeal and cross appeal from an order of the Supreme Court, Niagara County (Ralph A. Boniello, III, J.), dated March 17, 2011. The order, inter alia, granted the application of Rodney J. McKeown for dissolution.

It is hereby ordered that said cross appeal is unanimously dismissed insofar as it concerns the disqualification of an attorney from representing respondent-plaintiff in the future and the order is modified on the law by providing that the interest shall run from the date of the filing of the dissolution petition, and as modified the order is affirmed without costs in accordance with the following memorandum: Petitioner-defendant Rodney J. McKeown, the petitioner in proceeding No. 1 and the defendant in action No. 1 (petitioner), commenced proceeding No. 1 pursuant to Business Corporation Law § 1104-a, seeking the dissolution of Image Collision, Ltd. (ICL), a closely held corporation owned 50% by petitioner and 50% by Paul Trinkwalder, the respondent in proceeding No. 1 and the plaintiff in action No. 1 (respondent). Respondent commenced action No. 1 against petitioner, seeking, inter alia, damages for money allegedly taken from ICL by petitioner and business opportunities of ICL allegedly converted by petitioner. The proceeding and action were consolidated for trial. Respondent appeals and petitioner cross-appeals from an order that, inter alia, granted petitioner‘s application for dissolution, awarded respondent the continued use of ICL‘s business, awarded petitioner 70% of the value of the corporation, and dismissed the complaint in respondent‘s action.

Contrary to respondent‘s contention on his appeal, “Supreme Court‘s valuation of [the] Corporation and of petitioner‘s shares is supported by the evidence in the record, and respondent‘s contrary interpretations of fact and credibility do not warrant disturbing the court‘s determinations . . . ‘The determination of a fact-finder as to the value of a business, if it is within the range of testimony presented, will not be disturbed on appeal where valuation of the business rested primarily on the credibility of expert witnesses and their valuation techniques‘” (Matter of Penepent Corp. [appeal No. 11], 198 AD2d 782, 783 [1993], lv denied 83 NY2d 797 [1994]; see Matter of F.P.D. Realty Corp., 267 AD2d 111, 112 [1999]; Matter of North Star Elec. Contr.—N.Y.C. Corp., 174 AD2d 373, 373-374 [1991], lv denied 79 NY2d 752 [1991]). Also contrary to respondent‘s contention, he failed to establish that petitioner engaged in oppressive behavior within the meaning of Business Corporation Law § 1104-a before respondent denied petitioner access to ICL‘s equipment and accounts by locking petitioner out of the corporation‘s premises and changing all the locks and passwords (see generally Matter of Kemp & Beatley [Gardstein], 64 NY2d 63, 72-73 [1984]). Although respondent established that petitioner set up another business in 1998, the evidence also supports the court‘s conclusion that petitioner did so in response to respondent‘s oppressive acts, including buying the premises upon which ICL conducted business and then raising the rent to siphon away corporate profits, thereby depriving petitioner of his reasonable expectation that he would receive one half of ICL‘s earnings. The evidence also supports the court‘s further conclusion that, in 2002, respondent completely locked petitioner out of the business without compensation for his part of the corporation‘s value. Conversely, the evidence fails to support respondent‘s contention that petitioner‘s other business resulted in any diminution in the value of ICL.

Respondent did not object at trial to the qualifications of petitioner‘s financial expert, a certified public accountant with more than 50 years of experience that included valuing businesses, and he therefore failed to preserve for our review his contention that the expert is not qualified to valuate the business (see generally Matter of Alexis Marie P., 45 AD3d 458, 459 [2007], lv denied 10 NY3d 705 [2008]; Koffler v Biller, 262 AD2d 150, 151 [1999]; Smith v City of New York, 238 AD2d 500, 500 [1997]).

With respect to the cross appeal, we agree with petitioner that the court, in directing that interest accrue on the award, should have directed that the interest run from the date of the filing of the petition (see Matter of Whalen v Whalen‘s Moving & Stor. Co., 234 AD2d 552, 554 [1996]; see generally Matter of Pace Photographers [Rosen], 71 NY2d 737, 748 [1988]). We therefore modify the order accordingly. Petitioner further contends that the attorney who previously represented ICL should be disqualified from representing respondent in the future. “Where, as here, ‘the rights of the parties cannot be affected by the determination of [the] appeal,’ the appeal must be dismissed as moot” (Matter of Mattar v Heckl, 77 AD3d 1390, 1391 [2010], quoting Matter of Hearst Corp. v Clyne, 50 NY2d 707, 714 [1980]). Thus, even assuming, arguendo, that petitioner preserved that contention for our review, we nevertheless dismiss the cross appeal insofar as it seeks that relief.

We have considered the remaining contentions of the parties and conclude that they are without merit. Present—Scudder, P.J., Smith, Fahey and Sconiers, JJ.

SCUDDER, P.J., SMITH, FAHEY AND SCONIERS, JJ.